In personal injury litigation for car accidents, it is usually the insurance company of the person at-fault who will answer for them and pay the compensation to the injured person.  But, there are situations where the insurance company can refuse to provide coverage to their insured.  For example, the insurance company can decide that their insured was acting outside of the policy’s terms.

If the insurance company decides not to cover the at-fault driver, this means two things for the car accident victim:

• The insurance company will be obligated to pay no more than $200,000 to the injured person regardless of the policy limits; and
• The injured person must get an execution order against the defendant personally to be able to recover their damages.

What the victim recovers from the defendant personally may not be enough to cover their losses, including pain and suffering and income loss.  This will undoubtedly leave the injured person without sufficient compensation for their injuries.

First and foremost, it is important to ensure that the insurance company’s position is correct.  For example, an insured driver has the obligation to assist their insurance company by providing information about an accident, testifying about the accident and basically cooperating with the insurance company.  If the insured driver does not cooperate, the insurance company can deny insurance coverage but only if the breach by the insured driver is substantial and material.

In some situations, it is possible to ensure that the insurance company provides the full amount of the auto insurance policy to the injured, despite their off-coverage position.  This is called a relief from forfeiture.  Let’s see how it works.

Section 129 of the Insurance Act says that:

Relief from forfeiture

129 Where there has been imperfect compliance with a statutory condition as to the proof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part and the court considers it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it considers just.

There are two important elements to this section:

1. Imperfect compliance (vs. non-compliance)

s.129 applies to situations where the at-fault insured was not fully compliant with the conditions of his or her auto insurance policy.  Examples of this imperfect compliance would be a failure to give a timely notice of a potential claim to the insurer or providing incomplete information to their insurer.

If the actions or inactions of the at-fault driver are considered non-compliant, as opposed to an “imperfect compliance”, no one can invoke s.129 to access to full policy limits of the at-fault driver.

2. The Court considers it inequitable

The second element to demonstrate to the court is that the insurer of the at-fault driver was not prejudiced by the actions or inactions of the at-fault insured.  In other words, the person invoking s.129 must show to the court that the actions or inactions that caused the insurer to take an off-coverage position in the first place did not cause them harm or problems in their defence of the claim by the injured person.  For example, the insurance company already has sufficient information to defend the at-fault driver.

Dealing with insurance coverage can be daunting.  At Burn Tucker Lachaîne PC, we are here to help you understand your rights and obligations.  Contact us for a free consultation, in French or English, with one of our lawyers!

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